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Author Topic: microstock as an alternative investment?  (Read 11076 times)

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« on: September 01, 2012, 12:31 »
0
Hi.  I'm looking for an alternative investment and think microstock might be an option.  Specifically, I'm thinking about buying the copyrights to microstock that have existing cash flow.  Before I spend a great deal of time on this, I thought I might solicit some feedback. 

Assuming you would even sell your copyrights, how much would you sell them for?  1 year of existing cash flow, 5 years, 10 years?
Is anyone already doing this?  I did find a company paying $50 per image, but that is for images not already producing revenue.
Is it easy to verify how much an image is generating? 
Are you aware of any technical reasons the microstock agencies wouldn't allow the transfer of an image to another account.  I assume I would just resubmit it.  Note: I do not have an account with any stock agencies yet.
Would moving an image from one account to another completely wipe out cash flow?
Anything else I may be missing?

Thanks for your feedback, please keep the "I would never sell my copyright" comments off the thread, as I already know many would not sell their babies.

Thanks!



« Reply #1 on: September 01, 2012, 12:41 »
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Search the forum for existing threads.

That said, you'd be better off sinking your cash into Apple stock.

« Reply #2 on: September 01, 2012, 12:59 »
+1
We've had similar discussions before and there is always a significant gap between what sellers would sell for and how much buyers are prepared to pay. Sellers generally want 3-5 years earnings but buyers would be reluctant to pay more than 2 years because of the inherent risk. Essentially the risk is perceived differently by buyers and sellers.

« Reply #3 on: September 01, 2012, 13:24 »
0
We've had similar discussions before and there is always a significant gap between what sellers would sell for and how much buyers are prepared to pay. Sellers generally want 3-5 years earnings but buyers would be reluctant to pay more than 2 years because of the inherent risk. Essentially the risk is perceived differently by buyers and sellers.

Thanks gostwyck. 

As a potential buyer, I don't think 3-5 years is out of line.  I'm not completely versed on all the risks at this point (hence the thread).  I've searched, but I can't seem to find the discussion. Any help would be much appreciated.  I have found information on revenue attrition over time though.  That seems to be the biggest risk factor. 



« Reply #4 on: September 01, 2012, 14:05 »
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« Reply #5 on: September 01, 2012, 14:11 »
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You can buy my existing portefolio for 100,000 dollars.
If you promote it well enough it will pay back in five years time.



« Reply #6 on: September 01, 2012, 14:46 »
+1
I guess the main risks (to the level of income being generated) could be summarised as;

a) Newer, better, more images being uploaded. Roughly 5M new images are being approved each year on SS for example. Their library has grown roughly 30% in the last 12 months and will probably grow another 25% in the next year.

b) Agencies reducing prices, commissions or both

c) Agencies promoting newer images in default sort order

d) Fluctuations in currencies depending on where you live (no problem if you live in the USA obviously). Australian contributors, for example, have been badly hit by the strength of their currency against the USD.

e) You might also need protection from the artist whose portfolio you bought uploading newer similar work himself after the sale. I know I could quite easily reproduce a good many of my own images.

f) Alternative or cheaper sources of stock images could happen in the future

« Reply #7 on: September 01, 2012, 14:53 »
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Interesting thread (revisited). I remember the last one, and I felt a lot more positive about selling my port. Now, I'm not so sure I would want to sell it. I'd say the 3 to 5 years of income seems like a fair price though.

lisafx

« Reply #8 on: September 01, 2012, 15:05 »
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I'd consider it for 5x my current annual income. 

« Reply #9 on: September 01, 2012, 15:08 »
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I'd consider it for 5x my current annual income.

Nobody's got that sort of money Lisa!

« Reply #10 on: September 01, 2012, 15:26 »
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You'd be better off just producing you're own content for less money.

lisafx

« Reply #11 on: September 01, 2012, 15:29 »
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I'd consider it for 5x my current annual income.

Nobody's got that sort of money Lisa!

LOL!  Don't I wish.

Haven't you heard - you have to spend money to make money :)

« Reply #12 on: September 01, 2012, 16:18 »
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Tried that.
Very difficult to accomplish.

« Reply #13 on: September 01, 2012, 17:49 »
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I did find a company paying $50 per image, but that is for images not already producing revenue.
Care to elaborate a little more about this ? Seems like an interesting thing and I would love to know what conditions do they make.

EmberMike

« Reply #14 on: September 01, 2012, 17:51 »
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5x annual earnings sounds about right, and I'd do it. With no non-compete. I'm free to jump right back into the business building a new portfolio. Obviously not doing the exact same images I was doing before, but no restrictions on keeping me out of the business.


« Reply #15 on: September 01, 2012, 18:03 »
+1
I did find a company paying $50 per image, but that is for images not already producing revenue.
Care to elaborate a little more about this ? Seems like an interesting thing and I would love to know what conditions do they make.

Search the forum.  For $50 you sell your copyright.  It's not complicated, but it isnt smart.

« Reply #16 on: September 01, 2012, 19:17 »
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I did find a company paying $50 per image, but that is for images not already producing revenue.
Care to elaborate a little more about this ? Seems like an interesting thing and I would love to know what conditions do they make.

Search the forum.  For $50 you sell your copyright.  It's not complicated, but it isnt smart.

The fact that they cherry pick ones they want for $50, not buy the ones gathering dust on your hard drive that you want make this generally a bad deal.



RacePhoto

« Reply #17 on: September 04, 2012, 14:27 »
+1
Always a good laugh. Five times the annual income, that's assuming that in 2017 that income is going to be the same, or grow and double what it is in 2012.

At the same time potential sellers are complaining that income is dropping. So a buyer would be crazy to pay for five years, on dropping sales and materials that are getting old and stale. "Sales are dropping!" but people want double the going rate?  ???

Then I'll add like I do every time. Even if it was a doughnut business or someone selling magazines on a street corner or Bob's Burger Joint, the standard is two times the net income for a year!

To answer the OP. If you were highly motivated as a buyer, you shouldn't pay more than three times the annual return after expenses. You would expect to take three years to recover your expenses and start making a profit, also that money is earning nothing for those three years, where it could have been invested in something less risky and earn more, bottom line, for three years. Instead of nothing.

Five times! 

Besides that, I still wouldn't sell for five times the return, I like owning my own works. It's personal?
« Last Edit: September 04, 2012, 14:41 by RacePhoto »

« Reply #18 on: September 04, 2012, 14:31 »
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Always a good laugh. Five times the annual income, that's assuming that in 2017 that income is going to be the same, or grow and double what it is in 2012.

At the same time potential sellers are complaining that income is dropping. So a buyer would be crazy to pay for five years, on dropping sales and materials that are getting old and stale. "Sales are dropping!" but people want double the going rate?  ???

Then I'll add like I do every time. Even if it was a doughnut business or someone selling magazines on a street corner or Bob's Burger Joint, the standard is two times the net income for a year!

To answer the OP. If you were highly motivated as a buyer, you shouldn't pay more than three times the annual return after expenses. You would expect to take three years to recover your expenses and start making a profit, also that money is earning nothing for those three years, where it could have been invested in something less risky and earn more, bottom line, for three years. Instead of nothing.

Five times! 



well stated.  I think the problem lies in the value the photographer feels the port has, or the value the port has to the photographer and what its worth to the investor.

Knowing what images earn and their potential, I wouldn't pay more than 2 years income for photos (especially considering the work and risk of uploading / getting rejected) and I wouldn't sell my images for less than 5 years income.

lisafx

« Reply #19 on: September 04, 2012, 14:54 »
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Knowing what images earn and their potential, I wouldn't pay more than 2 years income for photos (especially considering the work and risk of uploading / getting rejected) and I wouldn't sell my images for less than 5 years income.

Exactly.  There is a disconnect between what the photographer feels their images are worth and what a potential investor would value them at.  That's why this idea keeps being suggested but nothing ever comes of it. 

RacePhoto

« Reply #20 on: September 04, 2012, 15:06 »
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Knowing what images earn and their potential, I wouldn't pay more than 2 years income for photos (especially considering the work and risk of uploading / getting rejected) and I wouldn't sell my images for less than 5 years income.

Exactly.  There is a disconnect between what the photographer feels their images are worth and what a potential investor would value them at.  That's why this idea keeps being suggested but nothing ever comes of it.

Yes and it will be back again in a few months.  :D

Someone wants to buy a cash flow, others don't want to sell theirs. There are much better investments, for a small fee, or percentage of the profit, I'll sell that information? Guaranteed better than buying microstock photos.

Hey, anyone who wants to buy a single image of mine for a cash price of $50, I'm selling. But I'm not selling my collection and I'm not selling my accounts. On an image by image basis, not wholesale.

lisafx

« Reply #21 on: September 04, 2012, 15:19 »
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Hey, anyone who wants to buy a single image of mine for a cash price of $50, I'm selling. But I'm not selling my collection and I'm not selling my accounts. On an image by image basis, not wholesale.

Then shouldn't you post a link to your portfolio so they can see the brilliant selection of highly successful stock photos you have on offer? 

You lecture others with such authority.  It's only fair to share.  Anyone can sitemail me if they are curious. 

« Reply #22 on: September 04, 2012, 15:50 »
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Point is, for the investor. After the the sixth year it is only surplus. That is a good investment.

« Reply #23 on: September 04, 2012, 16:04 »
0

Knowing what images earn and their potential, I wouldn't pay more than 2 years income for photos (especially considering the work and risk of uploading / getting rejected) and I wouldn't sell my images for less than 5 years income.

Exactly.  There is a disconnect between what the photographer feels their images are worth and what a potential investor would value them at.  That's why this idea keeps being suggested but nothing ever comes of it.

I agree. That is probably why a lot of these deals don't get done. Plus, the logistics are tricky to transfer portfolios, accounts, etc.

I guess on a side note, I would be more interested in taking on a partner for MyStockVectors (sharing royalties), than selling my portfolio. It would have to be the right partner though. Probably someone to handle the SEO, promotion, and marketing side of things.

« Reply #24 on: September 04, 2012, 16:06 »
+1
Point is, for the investor. After the the sixth year it is only surplus. That is a good investment.

*Sigh*

What if the income should drop by say 25% per year? That's roughly the rate at which the libraries are growing right now. How long will it take to produce your 'surplus' then?

Only a total fool of an 'investor' would pay 5x earnings for a microstock portfolio.

« Reply #25 on: September 04, 2012, 16:21 »
0
Point is, for the investor. After the the sixth year it is only surplus. That is a good investment.

*Sigh*

What if the income should drop by say 25% per year? That's roughly the rate at which the libraries are growing right now. How long will it take to produce your 'surplus' then?

Only a total fool of an 'investor' would pay 5x earnings for a microstock portfolio.

Exactly.
That is one of the main reasons I had a lot of trouble closing any deals (and I was close).

microstockphoto.co.uk

« Reply #26 on: September 04, 2012, 17:17 »
+1
I wouldn't sell my port, I know nothing about finance, and as others said the perceived value of a port from the seller and buyer's point of view may differ. So I won't answer about that part.

But regarding your other questions...

Are you aware of any technical reasons the microstock agencies wouldn't allow the transfer of an image to another account.  I assume I would just resubmit it.

Just resubmitting to a new account is a bad idea and will probably result in both accounts being banned. You need to tell each agency about the copyright transaction.

Some agencies say you must be the author; they don't accept public domain pictures anymore for the same reason; may this be a problem, even after buying copyright? (I don't know, I'm just wondering)

Would moving an image from one account to another completely wipe out cash flow?
Anything else I may be missing?

Yes, it can disrupt the cash flow. Of course good pictures will always sell better than bad ones on average. But there are random elements which can determine the fate of an image. E.g., initial sales have a strong effect on positioning on some sites. And now it's more difficult than some years ago to get many sales in a short time because of increasing competition. So there's no guarantee that a good seller will continue to sell after reuploading.


« Reply #27 on: September 04, 2012, 18:27 »
+1
Hi.  I'm looking for an alternative investment and think microstock might be an option.  Specifically, I'm thinking about buying the copyrights to microstock that have existing cash flow.  Before I spend a great deal of time on this, I thought I might solicit some feedback. 

Assuming you would even sell your copyrights, how much would you sell them for?  1 year of existing cash flow, 5 years, 10 years?
Is anyone already doing this?  I did find a company paying $50 per image, but that is for images not already producing revenue.
Is it easy to verify how much an image is generating? 
Are you aware of any technical reasons the microstock agencies wouldn't allow the transfer of an image to another account.  I assume I would just resubmit it.  Note: I do not have an account with any stock agencies yet.
Would moving an image from one account to another completely wipe out cash flow?
Anything else I may be missing?

Thanks for your feedback, please keep the "I would never sell my copyright" comments off the thread, as I already know many would not sell their babies.

Thanks!

Hi!

I have been experimenting over a year on this by hiring Illustrators to create some work for me. Send me a PM and I'll send you my contact info. Basically it's not as good as I thought it would be, but if you look it as a long term investment, I think this is something that can pay off.

Normally we say that 1 image (I only do this with Illustration for now) usually generates 1$ per month. It's not always true, but for most Illustrations I pay for, I can manage to get back my initial investment in 6 month to 2 years. I am currently checking results for a large batch I have had produced in the last months. Can't say these are making awfully well, but revenue in microstock is not constant. You might make 100$ with a portfolio one month, and the next images can sell more and get you 300$, or the contrary.

Right now I have a lot of money invested and I had a constant increase over the year, but since last April revenue stopped increasing, even decreased a bit or stalled. I am curious to see with the Summer months gone if it will go better.

There is no assurance this can work, the worst you can get is that it takes 10 years to get your money back and start making money... In 10 years, you never know what will happen to the Microstock world too. All things to consider.

« Reply #28 on: September 04, 2012, 22:19 »
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Point is, for the investor. After the the sixth year it is only surplus. That is a good investment.

*Sigh*

What if the income should drop by say 25% per year? That's roughly the rate at which the libraries are growing right now. How long will it take to produce your 'surplus' then?

Only a total fool of an 'investor' would pay 5x earnings for a microstock portfolio.

Yeah, and only a total fool of a copyright owner would sell it for less.
And as an investor, you can always invest in photographical equipment and produce your own money making portefolio.
You can also buy land, and put seeds in they ground. They multiply many times per year.
« Last Edit: September 04, 2012, 22:21 by JPSDK »

« Reply #29 on: September 05, 2012, 03:13 »
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If you get your investment back in 6 months to 2 years I would have thought that was pretty good.

« Reply #30 on: September 05, 2012, 03:31 »
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That would be like finding a goldmine. Money is abundant these days, interests are low.

And with my initial offer, you are in the 10- 20% PA range, which is an unusual high return. And yes, there is a risk. As there always is. The whole business might go down the drain and be replaced with something else, or a new copyright law might occur.

Actually, I dont like it. The whole thought of investing in copyrights. You should produce values instead. Or at least invest in means of production or infra structure.

And having slept on it, I would strongly advise people to only sell their rights for a time limited period.
« Last Edit: September 05, 2012, 03:46 by JPSDK »

Poncke

« Reply #31 on: September 05, 2012, 06:27 »
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The OP disappeared, must be a wum  :o He can have my port of 500 photos for 50$ each. Heck, he can pick his top 100 for 50$ each. I would get a 5DMKIII and a 24-70mm f/2.8L II USM and start over.  8)

« Reply #32 on: September 05, 2012, 13:25 »
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I was thinking about this subject lately and to be honest I, as the 'copyright producer', would actually be interested in selling rights for my video clips. It's still a hit and miss for me. Most footage I have uploaded doesn't sell at all, or gets 1 or 2 random downloads, so being payed upfront would make more sense. With pictures I think I'll take a chance and invest in my own work. :)


 

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